RAYMOND LTD. Vs. CCE, INDORE

JUDGEMENT

(1.) HEARD both sides. The appeal is against the Order -in -Original passed by the Commissioner of Central Excise, Indore -II. In the impugned order the Commissioner has confirmed the duty demand of Rs. 31,08,035/ - classifying the impugned goods under Heading 5503.19. There is no dispute that the appellants are converting Tow to Top prior to manufacture of yarn and in the process the impugned waste is produced, the classification and excisability of which is in dispute. In the impugned order, the Commissioner has specifically held the impugned goods to be excisable as the same are covered under the phrase "produced and manufactured in India" appearing in Section 3 of the Central Excise Act, 1944. He has also held that the impugned goods are marketable and marketed and finally, he has held the impugned goods to be classifiable under subheading 5503.19. He has also given a finding that the appellants were aware of the excisability of the product but had chosen not to file any classification list and hence the extended period of five years under proviso to Section 11A(1) of the Central Excise Act, 1944 is applicable on the ground of suppression. Shri Prakash Shah, learned Advocate appearing for the appellants states that the impugned goods are not excisable in view of Chapter Note 3 to Chapter 55 according to which sub -heading No. 5503.19 applies only to waste arising in or in relation to the manufacture of man made staple fibers. It is his contention that the impugned waste has arisen from the fiber while manufacturing yarn. He also relies on the following two decisions of the Tribunal in support of his contention: - -

(2.) SHRI S.S. Bhagat, learned SDR states that the period involved in this case is from 1991 -1992 to 1994 -1995 (up to November 1994). He, therefore, states that the reliance placed by the appellants on a patently wrong order passed by the Assistant Commissioner, Jalgaon much later in the year 1997 to escape the charge of suppression and the appellants attempt to cover up non -declaration in the classification list to escape the extended period for duty demand is without a sound basis. Moreover, he points out that the said wrong order of the Assistant Commissioner, Jalgaon was cited by the Appellants before the Adjudicating Commissioner who has for good reasons rejected the same as it had no precedential value.

(3.) AFTER hearing both sides and perusal of case records including cited case laws, we find that the decision in the case of Mohan Woollen Mills Ltd. (supra) relates to soft waste arising in the manufacture of yarn during the course of conversion of blended tops into rowings/sleeves and it has been held that the said soft waste is not classifiable under sub -heading No. 5503.19 following the earlier decision of the Tribunal in the case of Rajasthan Textile Mills (supra). We further find that in the case of Rajasthan Textile Mills (supra), it has been held that soft waste arising in the manufacture of yarn from non duty paid fiber at mixing stage to simplex stage is not classifiable under heading 5503.19. The Bench has based its decision on the fact that the appellants in that case did not manufacture the fiber but only purchased the same for the purpose of manufacture of yarn. The Bench also discarded the HSN Explanatory Notes which states that soft waste is obtained from carding, combing and other process preparatory to spinning of the staple fiber on the ground that the Explanatory Note cannot override the Chapter Note 3 to Chapter 55.